BRIEF POLICY

FRANCE’S “PIVOT” TO ASIA François Godement

In the last few years, has increasingly focused on Asia SUMMARY France is undertaking its own “pivot” to and to an extent appropriate for the region that is now at the heart within Asia. It is both increasing its focus of the world economy – and at the centre of its most significant on Asia in order to improve its external geopolitical tensions. Between May 2012 and November 2013, trade balance and attract investment, and a total of 33 French government visits to Asia took place, diversifying and deepening its political and compared to only 13 in the preceding two years. security co-operation with the region. Its pursuit of exports to Asia echoes German policy, but it is also joining the race for This brief examines France’s low-key “pivot” to Asia. It has Chinese investment that has been going two components: a search for markets and investments on for some time in Eastern and Southern and a diversification of political and security partnerships. Europe and in the UK. France’s bilateral push Although there seems to be no grand design behind these could undermine the unreserved support moves, they have implications for France and for Europe. In that France had previously given to a united the recent past, France had given unreserved support to a European approach on trade and investment. united European approach on trade and investment. Its new, However, much more than Germany, France increasingly bilateral approach to Asia may reflect intra- has in the last few years also increased European competition, but may also feed it. The second security co-operation with Asian countries, in component of France’s “pivot” implies the development particular with Japan. It has also increased of quasi-alliance ties with a number of Asian countries. It arms sales to the region, which has serious remains to be seen how this will play out with China and economic and security implications. Future whether other EU member states will follow France. jet fighter procurement by the French air force is in part conditional on a major deal to sell 125 Rafale fighter jets to India. On the other hand, becoming such a major supplier The economic imperative with a long-term commitment creates a liability should a conflict break out. Like other The new buzzword in the French foreign ministry is Europeans, France has shied away from any “economic diplomacy”. According to a senior official at the stand on Asia’s territorial issues, but it is economics and finance ministry, this means “seeking out becoming more tied than other EU member growth wherever it can be found – that is to say, focusing on states to some of the main protagonists. Asia”. In a centralised country that lacks private foundations and has few private firms (apart from a few big names) that can gain entry into Asian markets, the burden of opening deductible) on a nuit blanche (an all-night event) at the up markets in Asia has inevitably fallen to government. Grand Palais to celebrate the fiftieth anniversary of the Beginning under President Nicolas Sarkozy, it has sought to French-Chinese diplomatic relationship. Fabius said in the sell French products throughout the region. Before François French in January 2014: “If we could welcome five Hollande took over as president in 2012, he was more critical million Chinese tourists, we would reduce the deficit in our of China and in particular of its undervalued currency, but trade balance by 10 percent.”1 has since veered away from this line. However, France’s new Asia policy is also methodical. In The Hollande presidency’s major departure from France’s some ways, it is clearly based on that of Germany. Chancellor FRANCE’S “PIVOT” TO ASIA historical approach is to aim for a more systematised Angela Merkel has been networking with a wide range presence in Asia and a measure of strategic re-balancing away of Asian countries, from Mongolia and Kazakhstan to from China to other countries in Asia. He has tried to correct Vietnam and Indonesia, which she has visited three times France’s excessive focus on China by encouraging political over five years. France’s economic diplomacy bears some and strategic co-operation with other Asian countries from similarity to Germany’s diversified approach. But while India and Japan to Australia, Korea, Indonesia, Singapore, German companies benefit from the Länder, organisations and Vietnam. Some of this dates to an earlier period: the representing industrial sectors and political foundations, Chirac presidency had formed defence ties with Singapore French firms often go it alone. A recent example was the fight and Malaysia. Sarkozy wooed India (and Brazil) as large between French energy companies Areva and EDF, when emerging economies when relations with China became EDF parted ways with Areva in order to co-operate with the strained in 2008–2009. But the present effort is all-out. Chinese nuclear industry. One step removed from France’s Through this redeployment runs a new narrative: France’s remaining industrial titans, the government is trying to grim realisation that it is not at present “la grande nation” support a marketing strategy based on what Asian economies but instead “une puissance moyenne” – a middle power need, rather than on what French industry can offer. struggling for economic leverage. At the same time, France is also joining the race for Chinese Perhaps the best illustration of this “pivot” to and within investment that has been going on in Eastern and Southern Asia is the unprecedented number of visits to the region that Europe and in the UK. Consultants and former senior officials the government has carried out. Hollande has made four who, just a few years ago, would have been making use of presidential visits to Asia – to Laos, China, Japan, and India. their relationships to break into the Chinese market, are Prime Minister Jean-Marc Ayrault has made seven visits, to now being hired to find buyers for French assets: buildings Singapore, Philippines, Cambodia, Thailand, South Korea, that can be converted into hotels; struggling companies; Malaysia, and China. Foreign Minister has real estate; and financial partnerships. The challenge is been to China five times, and also to Vietnam, Indonesia, considerable, because the flow of Chinese capital, both and Japan. Defence Minister Jean-Yves Le Drian has been public and private, mostly works through offshore centres, to Singapore and India. Many more technical visits have and is therefore often hard to pin down. Who, for example, been made, including those by the foreign trade minister, would have guessed that Bo Xilai, the purged member of the Nicole Bricq. In fact, the only Asian countries that no French Chinese Politburo, could own a villa on the Côte d’Azur? And minister has visited are Bangladesh, Brunei and East Timor. at a time when a third Paris airport for freight remains only a pipe-dream, who could have guessed that Chinese investors Though it is impossible to establish a direct causal link would be sought out for two substitute projects (Vatry in with the increase in government visits, the balance of trade Lorraine and Châteauroux in Indre)? between France and Asia has begun to improve. France currently has a trade surplus with Australia, Korea, Hong However, France’s new Asia policy means more than simply Kong, Malaysia, and Singapore. French sales in Japan a scramble for Chinese cash. Economic necessity, and the increased between 2009 and 2012 before they were affected growing awareness that old-fashioned political trade does by the significant drop in the yen. France’s abysmal deficit not suffice, have led to a new process rather than a new with China has been slightly reduced, falling to €26 billion policy. In fact, France’s Asia policy is being rationalised. It no in 2012. Exports to India have also improved. In particular, longer involves a hoopla about strategy and “grand design”,

www.ecfr.eu the government is focused on, and even mesmerised by, the and it is unaffected by changing presidential priorities. increasingly likely sale of 125 Rafale fighter jets, frequently These aspects of French policy resulted in symbolic gestures valued at €8 billion. and declarations, but often provided neither continuity nor “after-sales care” for policies. In short, French Asia policy has The push for the deal with India and the top-down become less Gallic and more methodical. So far, the changes

May 2014 mobilisation with China reflect the French tradition of have been met with neither backlash nor any outcry for a politically driven grands contrats. €18 billion worth of sales were signed in April 2014 during President Xi Jinping’s visit, including for 1,000 civilian helicopters over the next few years. A group of major French companies reportedly ECFR/101 1 Sénat de France, Compte rendu analytique officiel du 8 janvier 2014, available at http:// spent between €1 million and €2 million (much of it tax- www.senat.fr/cra/s20140108/s20140108_1.html (hereafter, Sénat de France, Compte 2 rendu analytique officiel du 8 janvier 2014). more romantic script – it seems that tradition in French the independence of Vanuatu in 1980. As a result of these foreign policy has been exhausted. actions, France’s relations with its partners in the South Pacific have been normalised, based again on a realist and middle-power approach. Reversing the decline France’s political self-effacement and more pragmatic The time when France could pursue an independent Asia diplomacy are a function of the relative weakening of policy has long since passed. The last French initiative was its presence in the region. This decline has been at least a reaction to Singaporean Prime Minister Lee Kuan Yew’s temporarily reversed in military terms: the French naval proposal to create the Asia–Europe Meeting (ASEM) in presence in the South Pacific was considerably reduced by 1995–1996. In 2008, Sarkozy tried to raise questions with the end of the 1990s, but after 2001, France’s presence in the China over unrest in Tibet. This simple inquiry was untenable Indian Ocean was strengthened because of the country’s 12- without European backing, which was not forthcoming. And year involvement in the Afghan conflict. At the beginning of it would have necessitated tight and meticulous control of this century, French forces had only an insignificant presence French diplomacy in response to action by Chinese authorities. beyond the Malacca Straits, essentially limited to surveys by France made a financial contribution to the first resolution a training ship and a surprising joint naval exercise held in of the North Korean nuclear crisis, in 1996, along with other conjunction with China in March 2004, on the eve of the European countries. But it did not capitalise on its contribution Taiwanese presidential elections.4 and so gained no political influence from the initiative.2 Most Asian countries, aside perhaps from India, have little Instead of adopting a Gaullist policy of diplomatic interest in France’s unquestionable commitments in Djibouti recognition for North Korea in 2000–2001, France took or in its actions against piracy in the Indian Ocean, in a less active role on the issue than did other European protecting the French maritime zone in the Southern Indian countries. In 1999, France gave significant military and Ocean, or in supporting French combat forces deployed in humanitarian support for East Timor’s independence, but Afghanistan. The Indian Ocean is not East Asia, and neither this support mainly took place within the UN framework, as French nor European statements framing these actions did France’s contribution to peace in Cambodia in the early as a relevant contribution to Asian policy are particularly 1990s. The two Cambodian peace conferences held in Paris convincing to South-East or North-East Asia. in 1989 and 1991, along with the position taken by France after the Chinese Tiananmen Square crisis in 1989, were Worse, a poor understanding of Asian ideology, which the last signs of the originality present in France’s policies is firmly based on sovereignty, can cause problems. For in the 1960s: recognition of the People’s Republic of China example, at the annual Shangri-La Asia security summit in in 1964 and Charles De Gaulle’s speech in Phnom Penh in May 2008, French Defence Minister Hervé Morin presented 1966 criticising American involvement in Vietnam. France the right of pursuit invoked by French forces against pirates (as well as the UK) attempted to apply to the Association of in Somalia as a model for the Malacca Straits. While this Southeast Asian Nations (ASEAN) Regional Forum (ARF) in may have been acceptable to a country such as India, which 1995, but the effort failed. defends its right to retaliate against terrorists across the Pakistan border, the statement only served to shock ASEAN The decision to sell arms to Taiwan, which was made in 1991 members, who value the defence of national sovereignty at a time when Chinese diplomacy had been weakened by above all else. the Tiananmen crisis, could have been a sign of strategic originality. However, political corruption destroyed its France’s trade position in Asia has also continued to decline. chances of success. Quite logically, a former insurance President Jacques Chirac’s 1996 promise to triple France’s company director, Jacques Friedman, who was probably used market share in Asia over ten years is far from being to dealing with damage claims, was chosen, like a burgher realised.5 France at that time accounted for 2 percent of from Calais, to meet with China in January 1994, when the Asian imports. In 2012, it accounted for 1 percent.6 France French government stepped back from its participation in exports mainly to its neighbours, and only 12 percent of arming Taiwan.3 France has also changed tack in the South French sales are to Asian countries. It does not import any Pacific. The last series of nuclear tests was conducted in energy from the region. Moreover, the rules of the game the Pacific in 1995–1996, and the New Caledonian crisis have changed significantly because of new regulations and was resolved in 1998, after France had come to terms with

4 “Sino-French maritime exercise comprehensive”, People’s Daily, 15 March 2004, available at http://english.peopledaily.com.cn/200403/15/eng20040315_137543.shtml. 2 The creation of KEDO, the Korean Peninsula Energy Development Organization, which 5 Jacques Chirac, “Discours de M. Jacques CHIRAC Président de la République à aimed to provide North Korea with a substitute nuclear power plant, was met with SINGAPOUR”, Présidence de la République home page, 29 February 1996, available hostility by French counter-proliferation diplomats. at http://www.jacqueschirac-asso.fr/archives-elysee.fr/elysee/elysee.fr/francais/ 3 Jean-Pierre Cabestan, “France’s Taiwan policy: a case of shopkeeper diplomacy”, interventions/discours_et_declarations/1996/fevrier/discours_de_m_jacques_chirac_ Conference Paper given at The Role of France and Germany in Sino-European Relations, president_de_la_republique_a_singapour.2276.html. Hong Kong Baptist University, 22–23 June 2001, available at http://www.sciencespo.fr/ 6 French exports to Asia in 2012 moved closer (€56.4 billion, according to Minefi) to Asian ceri/sites/sciencespo.fr.ceri/files/jpcabest.pdf. imports for the same year ($6,663 billion, according to the ESCAP 2013 report), with an average exchange rate of €0.809 to $1 in 2012. 3 the rise of emerging Asian markets. At the end of the 1980s, undeniable component in the regional arms race and formed subsidised soft loans provided considerable support for a contributing factor to the uncertainties over the future exports, particularly for the large-scale industrial projects control of straits through which almost half of the world’s in which France excelled. Along with Algeria, China was the trade must pass. However, the Taiwanese adventure, along main destination for export credits, with taxpayers’ money with some slip-ups in Malaysia and Pakistan, have made being used to support major contracts. Right now, Asia is French policy seem somewhat mercenary, with no evidence overflowing with unused cash assets held by China, Japan, of an overall awareness of the region’s security architecture. 8 and Korea. This cash is often invested at ridiculously low interest rates, while trade regulations on subsidies for major France’s arms trade is now being reinvigorated, although FRANCE’S “PIVOT” TO ASIA contracts have become stricter, particularly in developed progress is taking place through a series of bilateral economies. initiatives rather than any systematic approach. Most Asian maritime countries have been forced to respond to the For these reasons, France has been forced to adapt its Asia increasing dangers in the South and East China Seas and the policy in three equally pragmatic ways. First, it is attempting rapid modernisation of Chinese military capabilities. Either to improve the competitiveness of its services. Second, it because there is space in the market for several suppliers, or is looking to engage in sectoral partnerships based more because these countries are looking to complement the US on the needs of target countries than on the promotion of suppliers on which they are very dependent, they are showing French opportunities. Third, it is seeking to build a strategic greater interest in French and European (particularly presence based on defence co-operation – that is, self- German and British) arms. France has the advantage of being financing through sales – rather than on a strategic capacity a permanent member of the UN Security Council and, more that does not really extend beyond the Indian Ocean into Asia. discreetly, of having an observation satellite industry that According to one official, France “cannot develop economic can provide its clients with information independent from diplomacy and influence unless it improves its instruments; the resources of the US. At a time when the very future of the France can no longer have only one overall Asia policy”.7 By defence industry is under threat from budget constraints at pursuing a series of bilateral relationships or, at a stretch, home, defence co-operation is a useful tool to promote sales. one policy for each of the various Asian sub-regions, France In 2012, 50 percent of total French arms sales were to Asia. tries to avoid the contradictions that are emerging in a profoundly divided Asia. It is not clear whether any of this new co-operation involves formal bilateral pledges of support; up to this point, there have been no conflicts and the supplier-client relationships Arms sales and strategic equidistance have not truly been tested. Furthermore, France is also pursuing its “global partnership” with China (established The sale of French armaments to Asia has never completely in 1997 by Chirac) or the pursuit of the Chinese market and stopped. However, morale in the industry was affected by the more recently of Chinese investors. It remains restrained scandals that plagued French sales of frigates and missiles in talking up the strategic content of its co-operation with to Taiwan, along with the 1989 European embargo on arms potential competitors to China. What some officials privately sales to China (which has no clear definition of scope, thus call an “equidistant position” would come under serious leaving room for interpretation on dual-use technology). challenge if a conflict situation were to arise. The industry was also chastened by the repeated failures of French aircraft manufacturer Dassault in Korea, Singapore, In August 2013, Foreign Minister Fabius, who visited China and India. The Japanese market has remained the almost five times in 18 months, said: “China has not, so far, been an exclusive domain of the United States, an implicit codicil in expansionist power: we must bolster this choice. In the short the American security guarantee. Pakistan has long been a term, one of our key challenges is to encourage a strategic very good customer of French arms bought using French modus vivendi between the United States and China in government credits, purchasing aircraft, submarines, and Asia.”9 In January 2014, he told the French Senate that “in a other materiel. But such deals have become harder because multipolar world, we do not have to choose between China, of France’s commitment to the Afghan conflict and the Russia, or even Japan”.10 This comment was made on the eve attitude of the Pakistani secret services to the Taliban. of the first meeting between French and Japanese foreign

www.ecfr.eu affairs and defence ministers, which led to the signature of Even so, France has retained a key position in South-East an unprecedented defence co-operation agreement between Asia, particularly in Malaysia and Singapore, as well as in the two countries. The foreign minister’s statement can be India, where it has played an important role as an alternative read as a form of diplomatic hedging. supplier. One important area for France, in which Germany

May 2014 comes a close second, is the provision of cutting-edge submarines to maritime countries. This trade has been an

8 In both cases, bribes over submarine sales have been alleged (Malaysia) or uncovered

ECFR/101 (Pakistan). 9 Laurent Fabius, speech at Futuroscope, Poitiers, 30 August 2013. 4 7  Interview with a French diplomat, Paris, November 2013. 10 Sénat de France, Compte rendu analytique officiel du 8 janvier 2014. By voicing a detachment from strategic issues in Asia, French France’s co-operation with Japan has shown the most diplomacy seeks to forestall any possible Chinese criticism. impressive progress. Despite Chirac’s interest in Japan, Quite uncharacteristically, it downplays the significance defence co-operation was forestalled by an almost complete of developments that have taken place throughout Asia, American monopoly as well as by Japanese fears that France engaging in no unnecessary fanfare or grandstanding. would advocate lifting the EU embargo on arms sales to China. Measures to improve relations with China have continued. Japan’s co-operation with third parties was also held back by The economy minister has put in place a new economic legal constraints within Japan itself, which prohibited it from and financial dialogue mechanism along with a sizeable exporting arms components or sub-systems. The greatest programme of sectoral co-operation. As one experienced extent of co-operation was the 2+2 dialogues that were observer notes, in relation to the territorial disputes in the instituted between high-level officials from the two countries’ South and East China Seas, France “remains as neutral as foreign and defence ministries. But the situation has changed possible”. But issues of free circulation, whether at sea or in rapidly since 2012. Hollande’s visit in 2013 created a common the air, as well as the protection of exclusive economic zones mechanism for consultation on arms transfers to third parties, (EEZs), are a different matter. France has the second-largest which is reassuring to Japan. maritime domain in the world, and its sheer size makes it essentially impossible to defend. For this reason, it observes The first ministerial-level foreign affairs/defence 2+2 dialogue with great concern the contests that have risen in Asia. held between France and Japan in January 2014 represented a turning point. The two countries have expressed common French commitments across the region are increasing and concerns on maritime issues and freedom of navigation, at sea becoming more complex. France has “strategic” partnerships and in the air. They have established industrial co-operation with China, India, and Japan (nationally as well as at on weapons, along with a dialogue on arms exports – including European level) as well as with Indonesia, Australia, Korea dual-use technologies, which is a new step for France as well (as part of another “global” partnership), Singapore, and as for Japan. They have also agreed to co-operate on maritime Vietnam. Although Malaysia rejects the term “strategic security in the Malacca Straits, where Japan is heading up an partnership”, France has become its main defence partner. international presence, in the Horn of Africa, and in the Gulf of Admittedly, the term is overused by China, the EU, and Guinea. The two countries are also committed to “reinforcing” ASEAN, who use it to mean only the absence of conflict or security measures in South-East Asia and the Pacific.13 to signify the importance of a relationship. However, in France’s case, the content of these partnerships is becoming very concrete. Like France, the UK has also made Asia a Bilateral and multilateral relationships defence priority, but, due to lack of a defence budget, the in a multipolar Asia UK’s partnerships remain largely declaratory.11 It is striking that these two very similar European middle powers co- France is committed to a series of bilateral agreements across a operate west of Malacca and compete to the east. region that is both interdependent and increasingly multipolar. The main tenets of multilateralism – recourse to international France has established three joint exercises with India, law and mediation, reconciliation, and compromise – do not which will take place in the region and in France. France resonate in Asia, where nationalism and historical rivalry has also participated in the Ulchi or Freedom Guardian are widespread and where communitarianism is particularly military exercises with Korea, as well as carrying out joint pervasive.14 Caught between bilateralism, which can have operations with Australia and New Zealand.12 Japan is unexpected consequences, and unrealistic multilateralism, interested in naval co-operation with France in the South France is moving closer to sub-regional organisations, Pacific, particularly because of France’s fishing zones there. particularly ASEAN, which has the advantage of being based Singapore has become France’s second-largest partner on neutrality and the desire to avoid conflict at all costs. in the region, and the partnership has been enhanced through military research and development. In all these Although it was criticised by the domestic press for its joint operations, France can implement NATO standards. focus on Laos, one of France’s smallest partners in Asia, However, it is somewhat hampered by the fact that different Hollande’s first visit to the region as president made it standards from NATO in Europe are used by the US Pacific possible to establish contacts with the heads of state of Command (USPACOM) across the region: like the DVD all ASEAN members during the Asia-Europe Meeting in market, NATO has been divided by regional standards! Vientiane. France has indicated that it may apply to join ASEAN’s ADMM-Plus dialogue.15 It is, however, acting more

11 Her Majesty’s Government, Securing Britain in an Age of Uncertainty: the Strategic 13 Joint press release by the Foreign Affairs and Defence Ministers of Japan and Defence and Security Review (London: The Stationery Office, 2010), available at France, 9 January 2014, available at http://www.diplomatie.gouv.fr/fr/IMG/pdf/_ http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/ corrige-1401090630_Communique_Conjoint_Final__FR___cle418565.pdf. documents/digitalasset/dg_191634.pdf. 14 François Godement, “Divided Asia: The Implications for Europe”, European Council 12 A full listing of France’s security co-operations in the region is mapped out in La on Foreign Relations, November 2013, available at http://ecfr.eu/page/-/ECFR91_ France et la sécurité en Asie-Pacifique (April 2014), p. 14, available at http://www. DIVIDED_ASIA_AW.pdf. defense.gouv.fr/das/relations-internationales/enjeux-regionaux/asie-pacifique/asie- 15 The ASEAN Defence Ministers Meeting Plus brings together ASEAN defence pacifique (hereafter, La France et la sécurité en Asie-Pacifique). ministers and foreign partners. 5 carefully and methodically in its outreach to ASEAN than countries, and India in particular, prefer to have a free rein it did in the past, when it announced its application to the in regional affairs and are not currently interested in any ASEAN Regional Forum at the same time as the UK, without structured European involvement. setting up any co-ordination between the two countries and without consulting any other European countries. Today, France is working with a more varied toolbox. For example, Beyond the short term it has applied to join the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia France is trying to reinforce its links with most Asian (ReCAAP), a regional organisation set up to combat piracy. countries, rather than with only the major powers in the FRANCE’S “PIVOT” TO ASIA And it hopes to transfer the ReCAAP model to the north-east region. It is showing pragmatism, greater modesty, and a Indian Ocean, where it is able to deploy more naval assets. comprehensive approach that is reflected in the schedule of government visits. Is this renewed engagement simply a The diversification of defence dialogues has also involved juxtaposition of bilateral policies, essentially motivated by France’s Western allies. In 2014, the defence ministry economic factors? established a dialogue with USPACOM. Three strategic discussions on Asian issues have been held with the UK. There is indeed a belief that higher marginal gains can be These actions have encouraged the EU’s External Action achieved by doing business with emerging countries than by Service and its military committee to develop a more focusing solely on Asia’s major powers. It is also showing transparent position on defence issues in Asia. France faces interest in the second-tier emerging countries, such as the a paradox: it is committed to co-operating with the US while Philippines and Laos; because of their smaller size, they at the same time acting as an alternative supplier for other are more scalable for French public levers and French allies and partners of the US. The US must also deal with companies. In its attempt to overcome its competitive this paradox: it doubtless can see the usefulness of a defence disadvantages, one of the country’s main objectives is to find co-operation with its oldest defence ally, that nonetheless niche markets. Another goal is to attract foreign investment, includes some local competition. including from Asian countries. At present, Asian investment officially represents only 20 percent of France’s total FDI In South Asia, on the other hand, France has chosen to inflow. The government’s position has changed considerably concentrate on a single partner, or perhaps its constraints over the past year and half. The politicisation of the Arcelor– and interests have made the choice unavoidable. France Mittal affair in 2012 and the emotions stirred up in France can hardly claim to be neutral on the India–Pakistan rivalry, by the company having an Indian CEO (despite its main in spite of longstanding defence relationships with both headquarters being in London and Luxembourg!) would not countries. It now maintains only a residual military presence occur today. in Afghanistan, which is tasked with training the Afghan police force, while Germany and the UK still have troops in Diversification and versatility have brought their first the country. A complete US withdrawal would endanger this economic results. France’s economic relationship with residual presence and, in the wake of Libya, Mali, and Syria, Japan is changing: it has gained two breakthrough Japanese France is well placed to understand the limits of American government contracts, notoriously difficult for Europeans commitment. It is clear that while the French military is to access (one contract for Airbus airplanes, another about increasingly active in sub-Saharan Africa, its involvement in signalling for a railway line, a sector previously closed to Afghanistan cannot continue. foreign industry). These developments should also be linked to the ongoing talks on a free trade agreement between the In fact, this points to a more general truth. France’s 2013 EU and Japan. France is among the countries that joined the White Paper on Defence and National Security and a process slightly late, and obtained a review clause in April recent policy document on France’s security involvement 2014 to evaluate Japanese progress after one year of trade in the Asia-Pacific emphasise France’s commitment to the talks. France and Japan are also partners in a nuclear power Indian Ocean and its stakes beyond this region.16 But they plant in Turkey and could potentially work together on a do not provide, in the words of one official, for “operational similar plant in Vietnam. commitments” east of the Gulf of Aden.17 In other words,

www.ecfr.eu France will make no commitment to intervention in Asia. China’s nuclear co-operation with third-party countries Some French (and occasionally British) strategists dream has made real strides, as demonstrated by its co-funding of reviving the idea of the Indo-Pacific, which would have and participation with France in building two European the advantage of being based on an area where France has Pressurised Reactor plants (EPR) at Hinkley Point in the territory and a real defence presence.18 But South Asian UK. Co-operation has not yet been implemented in other

May 2014 sectors such as transport, health care, urban development, and energy efficiency: during his state visit to France in April 2014, Xi indicated China’s interests in European “infrastructure”. France has backed European efforts to 16 La France et la sécurité en Asie-Pacifique. request reciprocity from China on government procurement. ECFR/101 17 Author interview with a French defence official, Paris, November 2013. 18 James Rogers, “European (British and French) geo-strategy in the Indo-Pacific”, This is a difficult undertaking, given the highly controlled 6 Journal of the Indian Ocean Region, Vol. 9, No. 1, 25 June 2013, pp. 69–89. nature of the Chinese economy. It runs parallel to the need pseudo-romantic ideals and concrete action seems to have for opening up Chinese firms to mergers and acquisitions, narrowed considerably – a welcome development. However, now that they have become so active beyond China’s borders. potential contradictions are also more important than they were in the past. War has not been talked about so much France is faced with a dilemma, and its reaction is very in East Asia since 1945. Emerging Asia’s firms and capital similar to the hesitation that has characterised French outflows are becoming significant forces in Europe itself. economic policy since 2012. Expanding the range of suppliers available for French infrastructure projects in, for With improved government co-ordination, France can example, energy, rail, or road transport would decrease the create a unity of purpose that is missing at the level of the cost burden on taxpayers. Central and Eastern European EU. However commendable, government action is only countries are pressing for this kind of change. However, one component of effective influence. At the level of the most likely for reasons of political visibility, France has market, French firms do not have the weight to create a confined its openness on this point to projects elsewhere in national policy, except in a very small number of industrial Europe: neither Hinkley Point nor a Chinese-built railway sectors – and even there, the civilian aircraft industry is now line or expressway could happen in France – yet. more European than French, and no nuclear plants exclude large foreign (Japanese or Chinese) co-manufacturing. The The €3 billion investment partnership that GDF Suez signed potential sale of Alstom, France’s rail and energy champion, with PRCF, China’s leading sovereign fund, in 2011 was would also undo a major building block of a national the largest investment it had ever made in Europe. But it industrial strategy. Leveraging the EU for negotiations, applies to European rather than national distribution. That sharing resources with partners to gain traction in areas of agreement has acted as a trailblazer, bringing about a review co-operation such as public aid, health, and urbanisation, of European obligations on major infrastructure projects that and coming to terms with a compromise between the free include an appeal to foreign investors such as China. Chinese market and regulation are essential ingredients for French suppliers could probably deliver the planned Greater Paris economic success in Asia. orbital metro system at a very good price. But in spite of the fact that the project cannot be publicly funded in the current economic climate, caution prevails. Similarly, with regard European co-operation and competition to telecommunications infrastructure and networks, France is hesitant to engage in major deals with Asian partners. It More than many other EU member states, France now feels has not completely closed the door on China’s Huawei and the need for European support for its economic interests in its competitor, ZTE (which have been the target of an EU Asia. Paris needs Brussels because of the negotiating leverage preliminary enquiry over their funding). But France also it can bring in trade and investment agreements in Asia, and remains preoccupied with issues of cybersecurity and is increasingly on European markets. France is also aiming closely monitoring the choices made by its neighbours. to attract financial services away from London, and would like to play a role as the eurozone’s monetary and financial Without advertising it much, France is the biggest market hub. France is therefore bringing its problems to Brussels – a for trade in the Chinese yuan within the eurozone, and defensive approach that was displayed when France found competition with the London financial market is probably itself at the forefront of the initiative on Chinese solar-panel making France less demanding on the transparency of dumping in 2012. France supports vigorous offensive trade some of these funds. However, France is also attracted to diplomacy in Asia and is among the member states that have the more protectionist model of government contracts and required a review of negotiations with Japan on a free-trade public investment that prevails in the US and Canada, where pact after a year – a step calculated to extract substantial the “Buy American” Act and security concerns can justify deliverables from Japan at the outset of the negotiations. blocking investments. It has not gone as far as countries such as the UK, Sweden, or Denmark in making liberal economic However, the core of France’s Asia policy remains nationally choices, but it is also looking closely at this kind of policy. based. This highlights the competition between major Out of necessity, the general search for foreign investors European countries – particularly in economic affairs. By continues to accelerate. declaring itself open to Chinese investment in the renminbi offshore market, France is competing with the UK, which is In economic and security choices, pragmatic and even pursuing its own policies on monetary and financial issues opportunistic policies lead to some contradictions or and is working hard to preserve the offshore system based in inconsistencies. These aspects have always been part of London. France is also competing with the UK in the defence France’s Asia policies: Aristide Briand’s liberal plea for the field and with Germany in exports and with Southern and League of Nations was made at a time when France held Eastern European countries for investment – in particular colonies. The cult of French sovereignty did not prevent a from China. French companies’ pressing need for capital is bitter war against the independence of its colonies. Former now reflected by large financing deals or equity investments president François Mitterrand spoke out for a post-Yalta from China in major French companies such as GDF Suez, world, but sold weapons to Taiwan for essentially mercantile Club Med, and PSA. reasons. In view of this past, the gap between Cartesian or 7 In the long term, however, France will need to work within the EU to further its interests and meet its commitments. The country is located at the intersection of the two European geo-economic groupings: it belongs both to the crisis-riven south and to the technology-exporting north. France is a major international investor and also seeks to remain one of the world’s top destinations for foreign investment. At a time when European defence policies are more abstract than ever, France has a capacity for military projection that FRANCE’S “PIVOT” TO ASIA is now unique in Europe – although this capacity, along with its active deployment, is now threatened by the looming budgetary crisis. Even if France’s hard power does not really extend to East Asia, and remains on a modest scale in the Indian Ocean, it lends itself to partnership with existing and emerging Asian defence policies.

France’s European policies face a contradiction that affects more than just its relationship with Asia. France wants a Europe that can take action, but it remains committed to retaining decision-making powers for member states. However, competition between member states means that Asia, and particularly China, can safely ignore the machinations of both the European Parliament and the intergovernmental European Council. On the other hand, the European Commission may not have enough teeth, but it has a reach and a federal potential that Asian economies cannot afford to ignore.

In cases where decisions belong to member states, it is impossible to be sure of confidentiality – a first prerequisite of any negotiating strategy. Uncharitable neighbours quickly make public the identity of countries with more exacting negotiation positions, as happened recently in the solar- panel market.19 As on many other issues, France’s Asia policy remains trapped halfway between Europe’s half- baked intergovernmentalism and a federal system that many politicians know must now be implemented as a matter of urgency, but which will diminish both France’s and their own personal status. www.ecfr.eu May 2014 ECFR/101

8 19  Interview with a French official, Paris, November 2013. 9 FRANCE’S “PIVOT” TO ASIA www.ecfr.eu May 2014 ECFR/101 10 About the author Acknowledgements

François Godement is the Head of the Asia & China This brief is based on a chapter of the Annuaire Asie 2014– programme at the European Council on Foreign Relations 2015, which is published in French by Asia Centre and La and a Research Associate at Asia Centre. He is also a professor Documentation Française. I would like to thank the dozen at Sciences Po and a consultant to the policy planning staff of or so senior civil servants who agreed to interviews, and the French foreign ministry and to the OECD and the EU. His Marc Julienne of Asia Centre, who helped to set them up publications for ECFR include A Power Audit of EU–China and transcribed their contents. Needless to say, the final Relations (with John Fox, 2009), The Scramble for Europe product and opinions are solely ours. The text was edited (with Jonas Parello-Plesner and Alice Richard, 2011), and Xi by Justine Doody. Jinping’s China (2013).

11 ABOUT ECFR

The European Council on Foreign Relations (ECFR) is the first pan-European think-tank. Launched in October 2007, its objective is to conduct research and promote informed debate across Europe on the development of coherent, effective and values-based European foreign policy.

ECFR has developed a strategy with three distinctive elements that define its activities: FRANCE’S “PIVOT” TO ASIA • A pan-European Council. ECFR has brought together a distinguished Council of over two hundred Members – politicians, decision makers, thinkers and business people from the EU’s member states and candidate countries – which meets once a year as a full body. Through geographical and thematic task forces, members provide ECFR staff with advice and feedback on policy ideas and help with ECFR’s activities within their own countries. The Council is chaired by Martti Ahtisaari and Mabel van Oranje.

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May 2014

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